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Those Reaching Middle Age of their Ministry Mississippi Conference August 16, 2010

Those Reaching Middle Age of their Ministry Mississippi Conference August 16, 2010. Presented by: Ron Coleman. On the Road to Retirement. When should you retire? When do you want to receive your retirement benefits? How much will you need? Which benefit options should you choose.

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Those Reaching Middle Age of their Ministry Mississippi Conference August 16, 2010

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  1. Those Reaching Middle Age of their Ministry Mississippi Conference August 16, 2010 Presented by: Ron Coleman

  2. On the Road to Retirement • When should you retire? • When do you want to receive your retirement benefits? • How much will you need? • Which benefit options should you choose

  3. On the Road to Retirement • What are the retirement income sources? • How to increase your pension? • Where to get financial planning? • Find out if you’re on track

  4. Overview • Retirement Provisions • Retirement Plans • LifeStage Investment Management Service (LifeStage) • Comprehensive Protection Plan (CPP) • Ernst & Young Financial Planning Services • Pension Projections

  5. Denominational Average Compensation (DAC) • Average plan compensation of United Methodist clergy serving full-time appointments • 2010: $60,341 • 2011: $61,716

  6. Conference Average Compensation (CAC) • Average annual compensation of United Methodist clergy serving full-time appointments related to a specific conference • 2010 = $59,379 • 2011 = $60,158

  7. Provisions for RetirementThe Book of Discipline ¶358 Normal Retirement • Age 65 or 40 years of service Mandatory retirement • Age 72—effective January 1, 2009 Early Retirement • Age 62 or 30 years of service—effective January 1, 2009 20-Year Retirement

  8. Retirement Plans Clergy Retirement Security Program (CRSP) Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007+ CRSP United Methodist Personal Investment Plan (UMPIP)

  9. Pre-1982 Benefit • Service before January 1, 1982 • Pension credit—Yes or No • Annual conference is obligated to fund a pension for those years • Benefit = Life Annuity

  10. Pre–82: Benefit Paid for Life Single participant • Single-life, no refund • Benefit ceases upon participant’s death Married participants •Life with 75 % to surviving spouse (spouse at time of retirement)

  11. Retirement Plans Clergy Retirement Security Program (CRSP) Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007+ CRSP United Methodist Personal Investment Plan (UMPIP)

  12. Ministerial Pension Plan: 1982–2006 • Benefit based on account balance and participant’s annuity selection • Account balance invested until benefits begin • MPP account balance (including accumulated earnings) remains separate until distributed in retirement

  13. Reverend John Smith1234 Nowhere StreetChicago, Illinois 12345 Annuity • A stream of payments • Period certain (term) annuity = benefit paid over a guaranteed period • Life annuity = benefit paid for life (if joint = two lives)

  14. Retirement Distributions:MPP (Post-1981) • Application for benefits • May leave on account until age 70½ • One-time distribution of up to 35 %of account • “Annuitize” at least 65 % of account • 7 Annuity options • 0, 50, 70,75,100% survivor • 0, 2-5 % annual increases

  15. Retirement Plans Clergy Retirement Security Program (CRSP) Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007+ CRSP United Methodist Personal Investment Plan (UMPIP)

  16. Clergy Retirement Security Program (CRSP) A new retirementplan, effective January 1, 2007 providing a core benefit at retirement with two components

  17. Clergy Retirement Security Program Security Choice/Flexibility + Defined Benefit(DB) Defined Contribution(DC)

  18. Defined Benefit Component Monthly payments, payable for life, calculated by multiplying the following and then dividing by 12: • 1.25% • DAC at time of retirement • Years of credited service from January 1, 2007 Example for 2013 retirement .0125 x $65,000 (hypothetical DAC) x 6.5 years= $5,281 ÷ 12 = $440 per month

  19. Defined Contribution Component • Plan sponsor contribution of 3% of clergyperson’s plan compensation • Account balance invested as directed by participant • Available as cash distribution at retirement (or termination) • Full lump sum • Partial lump sum • Cash installment (e.g., monthly)

  20. Retirement Plans Clergy Retirement Security Program (CRSP) Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007+ CRSP United Methodist Personal Investment Plan (UMPIP)

  21. UMPIP Sources • Before-tax contributions • After-tax contributions • Rollovers • 401(a) • 401(k) • 403(b) • IRA

  22. UMPIP Access • In-service withdrawals • Age 59½ • Hardship loans • Hardship withdrawals • Disability • Termination • Retirement

  23. UMPIP • Benefit choices • Full lump sum • Partial lump sum once per quarter • Cash Installments • Leave on account • Flexibility to make changes • May pass on to heirs

  24. Advantages of Investing Through the General Board • Socially responsible investing • Competitive returns • Low expense ratios • Access to LifeStage Investment Management Service • Uphold the values of The UnitedMethodist Church

  25. IEF USEF BSVPF • Stable Value Fund•Inflation Protection Fund•Fixed Income Fund• Multiple Asset Fund•Balanced Social Value Plus Fund• U.S. Equity Fund• International Equity Fund MAF Risk FIF IPF SVF Return Potential Investment Options

  26. UMPIP Unitized FundsExpense Ratio Comparison 3.00 413 Foreign Stock Funds 753 Funds with Balanced Objective 1,417 Growth and Income Funds 1,773 Multi-Asset Class Funds 1,151 Short, Intermediate, And Long-Term Bond Funds 2.50 119 Inflation Protection Funds 238 Short-Term Bond Funds 2.00 1.50 1.00 0.87 0.80 0.70 0.50 0.49 0.49 0.42 0.37 0.00 SVF IPF FIF BSVP MAF USEF IEF Source: Wilshire Compass and Lipper as of 03/31/09

  27. 1.8% SVF IPF FIF MAF BSVPF USEF IEF General Board Competitive ReturnsYear-to-date July 23, 2010 2.6% 5.9% 2.0% 1.4% 1.4% -1.6%

  28. LifeStage Investment Management Service (LifeStage) LifeStage Investment Management Service (LifeStage)—managed accounts

  29. LifeStage • Creates a customized investment portfolio for you • Reviews asset allocation annually • Rebalances your account as needed • Allows you to focus on other things Benefits:

  30. Target Fund Allocation Risk Tolerance Age GBOPHB Account Balances Age at Retirement ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund Social Security Eligibility Value of Social Security Benefits LifeStage: Fund Selection Feature

  31. Before Actual Fund Allocations After Actual Fund Allocations 14% 13% 13% 13% 29% 27% 26% 34% 17% 14% ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund No participant intervention required LifeStage: Rebalancing Feature

  32. MPP x CRSP 3% x UMPIP—personal contributions x LifeStage Optional Required

  33. Comprehensive Protection Plan Death and Disability

  34. CPP Retirement Eligibility • Eligible to receive a benefit from CRSP • Two consecutive years preceding retirement • At least five of the 10 years immediately preceding retirement or 25 years January 1, 2009

  35. CPP Death Benefits 2010 Active: $50,000 Retired: 30% of DAC ($18,102) Spouse: 20% of DAC ($12,068) Surviving spouse: 15% of DAC ($ 9,051) Child: 10% of DAC ($ 6,034)

  36. Ernst & Young Financial Planning Services Financial Planning 1-800-360-2539

  37. Consultation Topics • Creating a retirement plan • Choosing retirement plan investments • Buying a home • Developing an estate plan • Managing debt • Funding children’s education • Evaluating insurance needs and options

  38. www.gbophb.org

  39. 1-800-851-2201 www.gbophb.org

  40. Hebrews 11:7 “ By faith Noah, being warned by God concerning events as yet unseen, took heed and constructed an ark for the saving of his household….”

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